Wednesday, January 4, 2012

Natural Gas: LNG Tanker Rates (TGP; GLNG)

Tankers hauling liquefied natural gas
at sea will earn record rates in 2012 as demand reaches an all-
time high, beating returns from vessels carrying oil and coal,
according to the world’s biggest shipping hedge fund.

The tankers, each holding enough gas to meet about 25
percent of peak daily winter demand in the U.K., will earn as
much as $200,000 a day this year, from $140,000 at the end of
2011, said Andreas Vergottis, the Hong Kong-based research
director at Tufton Oceanic (OCEHEDU) Ltd. That means the most profit ever
for Golar LNG Ltd. and Teekay LNG Partners LP, which operate 33
of the vessels, analyst estimates compiled by Bloomberg show.

Demand for LNG, liquefied by cooling the gas to minus 260
degrees Fahrenheit, is rising as nations from the U.K. to South
Korea increase pollution curbs. Gas emits about half the carbon
dioxide of coal. Japan, the biggest importer, is buying more
after closing 89 percent of its nuclear capacity following
March’s Fukushima disaster, eliminating a glut of tankers. Ship
shortages may worsen, with the 372-strong fleet projected to
expand just 0.8 percent this year, Morgan Stanley estimates.

“LNG is a high-growth, high-profit industry,” said
Vergottis, whose research is used by the $1.45 billion Oceanic
Hedge Fund, which gained 6.8 percent in the first 11 months of
the year as the Lloyd’s List/Bloomberg Index of the 50 largest
shipping companies (LLSIVAL) slumped 39 percent. “Next year looks even
more hot. There’s not a single cloud for two years.”

The cost of hiring an LNG tanker for a year or more
averaged $97,630 a day in 2011, from $43,663 in 2010, according
to Fearnley LNG, an Oslo-based consultant and brokerage that’s a
unit of the Astrup Fearnley Group.

Maritime Routes
That compares with last year’s 90 percent decline in rates
for the largest oil tankers to $1,214 a day as the biggest fleet
in about three decades overwhelmed demand, data from the London-
based Baltic Exchange show. Capesizes hauling coal and iron ore
averaged $15,639 a day last year, from $33,298 in 2010,
according to the bourse, which publishes freight costs for more
than 50 maritime routes....MORE